Four key assumptions in the Congressional Budget Office’s (CBO) analytical tool for projecting federal spending and revenue trends heavily distort its results in favor of continually increasing outlays and expanding government regulation, according to a new Economic Policy Innovation Center (EPIC) analysis.

“The CBO baseline is important because it is used as the official benchmark against which legislative proposals are scored. The biases in the baseline allow the true costs of legislation to stay hidden from the public and members of Congress,” according to EPIC’s director of Budget Policy. Dickerson’s analysis was first delivered as part of the R Street Institute’s recent Virtual Federal Budget Reform Forum: Recommendations for Congress.

Dickerson points to four flaws in the baseline, three of which, in effect, make projected spending look much higher than it could otherwise be, and one of which makes tax revenues coming into the U.S. Treasury Department appear to be bigger than they actually are if Congress makes no changes in outlays or current law. The four flaws, according to Dickerson, include:

• Discretionary appropriations are assumed to continue and grow with inflation each year. The result is a spending level authorized for one year for a specific program or agency which is assumed by CBO to continue throughout the 10-year period covered by the baseline.
• Certain direct spending programs larger than $50 million are assumed to be extended beyond their statutory expiration. This means a program with an annual budget greater than $50 million is assumed by CBO to go on indefinitely until Congress acts to the contrary.
• Entitlement programs are assumed to make all scheduled benefit payments, even if a program’s trust fundand financing are inadequate to do so. This means a program like Social Security and Medicare, which depend in great part upon trust funds — taxes paid into the system by employers, workers, and the self-employed — will continue paying full benefits using general revenues.
• Excise taxes dedicated to a trust fund are assumed to be continued beyond their statutory expiration. Under current law, the federal government receives between $75 and $100 billion annually from excise levies on alcohol, gasoline, and tobacco products.

Together, the resulting bias “hides tens of trillions of dollars in spending in the baseline,” Dickerson contends. For example, of the $85 trillion in total spending the baseline projected for the 2025-2034 period, nearly 30%, or $25.5 trillion, is made up of spending not specifically authorized by Congress.

The EPIC analysis comes as Congress and Trump confront the reality that federal spending has increased more than 80% since 2015, zooming up from $5.01 trillion that year to $7.01 trillion in 2025. Entitlement spending on programs like Social Security and emergency spending related to the COVID-19 pandemic were the major drivers of the explosion in outlays.

The four flaws are included in CBO’s baseline budget tool due to requirements included in the 1985 Balanced Budget and Emergency Deficit Control that was adopted in the first year of the second term of then-President Ronald Reagan. Legislation introduced in the 118th Congress by Rep. Ben Cline (R-Va.) — the No Bias in the Baseline Act — would eliminate all four of the flaws. The Virginia Republican is a member of the House Budget Committee.

Being in the center of controversy is a familiar position for CBO staffers. Most recently, House Republicans harshly criticized what they view as CBO’s chronically low projections of the positive economic impact of tax, regulation, and spending cuts at the federal level.

In its Concurrent Resolution on the 2025 Budget, for example, House Republicans noted one of the flaws pointed out by the EPIC analysis, noting that CBO “is obligated to produce an economic forecast that assumes an indefinite extension of current law, including the explosion of deficit and debt levels over the next decade. This is partly why CBO is forecasting average real Gross Domestic Policy (GDP) growth of just 2.0 percent over the next 10 years, well below the long-term trend of 3.1 percent in the United States.”

Similarly, in May 2025, when CBO released two analyses requested by House Democrats evaluating aspects of President Donald Trump’s One Big Beautiful Bill (OBBB), House Budget Committee Chairman Jodey Arrington (R-Texas) issued a sharply worded refutation.

“This is a smoke and mirrors tactic to try to deceive the American people into thinking that the One Big Beautiful Bill will benefit the top 10 percent at the expense of the bottom 10 percent. Ironically, the only thing Democrats are proving is that our policies are a massive success,” Arrington said. 

“First, they’re not measuring economic benefits to low-income earners; they’re measuring federal resources distributed. For instance, there are fewer transfer payments to people on welfare if you prohibit illegal immigrants from accessing these programs and enact common sense work requirements to stop trapping people in dependence,” he continued.

“Second, when you allow Americans from every walk of life to keep more of their income, you lift millions out of poverty, just as we witnessed in President Trump’s first term. Democrats measure success by how many people are stuck on the welfare rolls; Republicans measure success by how many Americans are lifted off of them,” Arrington explained. 

And Senate Finance Committee Chairman Mike Crapo (R-Idaho), who is also the number three ranking GOP member of the Senate Budget Committee, told the Senate in an April 2025 floor speech during debate on the OBBB that CBO’s baseline budget analysis incorrectly evaluates tax policies.

“There’s an inherent bias in Congress’s scoring process where tax policy is treated differently than spending policy. If tax rates are scheduled to increase, like they are right now if we don’t act, preventing that tax hike is counted as a ‘cost’ in uncollected future revenue. But many spending programs are assumed to be extended beyond their expiration, so the spending just continues and continues, unabated, which the budget rules say do not have any cost,” Crapo told colleagues on the Senate floor.

Spokesmen for Senate Budget Chairman Lindsey Graham (R-S.C.) and Chairman Arrington (did not respond to The Washington Stand’s request for comment. Also not responding were spokesmen for Senator Jeff Merkley (D-Ore.) and Rep. Brendan Boyle (D-Pa.), the top Democrats on the two congressional budget panels.

For all the controversy, Dickerson expressed optimism to TWS that needed changes are coming. “The CBO is an important resource for lawmakers. It can also be a source of frustration, particularly when CBO fails to be transparent about its scoring, assumptions, and biases. While Director Swagel has taken steps to improve CBO, more work remains to be done,” he said.

“There is significant interest on both sides of the aisle in addressing the shortcomings at CBO. The House Budget Committee has signaled that CBO oversight will be a major focus, including conducting regular oversight hearings and advancing the first-ever audit of CBO’s operations,” he added.